Stocks mixed ahead of RBA rate decision

Shares in the Asia-Pacific traded mixed at the open on Tuesday ahead of the Reserve Bank of Australia’s rate decision.

Japan’s Nikkei 225 slipped 0.17% and the Topix index lost 0.3%.

The Kospi in South Korea rose 0.14% and the Kosdaq gained 0.43%.

In Australia, the S&P/ASX 200 was little changed.

The Reserve Bank of Australia is expected to raise interest rates by a half point to 2.35%, according to a poll by Reuters. The Australian dollar was slightly stronger at $0.6809 in morning trade.

MSCI’s broadest index of Asia-Pacific shares outside of Japan inched 0.11% higher.

On Monday, the People’s Bank of China announced it would cut the foreign exchange reserve requirement ratio, or the amount of FX reserves that financial institutions must hold, to improve the ability of financial institutions to use foreign exchange funds.

Starting Sept. 15, the RRR will be 6%, down from 8%.

“This cut should help increase FX liquidity and thus lower depreciation pressure for CNY. While the actual impact on FX liquidity is small … this cut serves as a strong policy signal that the PBOC is uncomfortable with the rapid depreciation of the currency,” analysts at Goldman Sachs Economics Research wrote in a note late Monday.

U.S. markets were closed overnight for a holiday.

In oil markets, Brent crude rallied nearly 3% following news that OPEC and its allies agreed to a small production cut. U.S. crude rose more than 2%.